Jump to content
House Price Crash Forum
OnlyMe

Mpc Considered Changing Inflation Measure

Recommended Posts

Non-core? How the ****** can you say that the cost of food and energy is not a core item of conumption. Who the ****** o do they they are comming and what the ****** do they think it will do to iprove the situation. Why bother fiddling the stats even further than they are already, they are already ignoring their mandate and the inflation they are creating.

Jumped up little tossers.

http://www.mortgageintroducer.com/mortgages/240823/4/Daily_news/MPC_considered_changing_inflation_measure.htm

MPC considered changing inflation measure

The Monetary Policy Committee has discussed changing the way inflation is measured so that volatile food and energy prices are excluded.

MPC considered changing inflation measure

Yuan Phoon, 22 July, 2011

During a roundtable in June MPC members discussed whether there would be merit in excluding the volatile prices of “non-core” items, such as food and energy from the consumer prices index.

This index has exceeded the 2% annual target set by the government for much of the past three years. In June, it fell back to 4.2% after hitting 4.5% the month before.

Share this post


Link to post
Share on other sites

With housing already removed, what else is more core than energy costs and food prices?

They might as well replace GDP with the Tractor Production Index while they're at it :rolleyes:

Share this post


Link to post
Share on other sites

The Monetary Policy Committee has discussed changing the way inflation is measured so that volatile food and energy prices are excluded.

Don't they know that "deflation cometh"?

Mendacious *******.

Share this post


Link to post
Share on other sites

:lol: when i saw the thread title i was going to joke that they'll take out food and fuel but that's what they really want to do. Ha ha ha. Volatile you say! You mean "rising".

not funny at all is it. :angry:

My passport is looking more precious every day.

Edited by athom

Share this post


Link to post
Share on other sites

One of those stories that you have to double check it's not The Daily Mash. I've often mused as to how I'd react if I saw Merv on a train (as if..) or in the bogs at Lord's or something. Previously, I'd have been of the opinion that having a go would be chavvy and uncouth, but perhaps now I might be inclined to have a quiet word, not that it would make feck all difference.

Share this post


Link to post
Share on other sites

Previously, I'd have been of the opinion that having a go would be chavvy and uncouth, but perhaps now I might be inclined to have a quiet word, not that it would make feck all difference.

But Merv is doing an excellent job, he is doing exactly what his paymasters ask of him.

Did you seriously think he is working for you or for anyone of us?

Share this post


Link to post
Share on other sites

But Merv is doing an excellent job, he is doing exactly what his paymasters ask of him.

Did you seriously think he is working for you or for anyone of us?

No, but I feel I might be able to make a convincing case to him that he could work for us if I had his testicles in my hand.

Share this post


Link to post
Share on other sites

No, but I feel I might be able to make a convincing case to him that he could work for us if I had his testicles in my hand.

I doubt he has any... :P

Share this post


Link to post
Share on other sites

Yep, exclude the things people need and buy daily, that's a great way to measure how fast prices are rising.

The MPC is a laughing stock.

I'm not really sure why they are even bothered anyway. How long has it been since they tried targeting inflation?

Share this post


Link to post
Share on other sites

This inflation fiddling game is being played out in America, only a matter of time before it comes here.

My only surprise is that they 'considered changing' the inflation measure and didn't actually change it.

Share this post


Link to post
Share on other sites

This inflation fiddling game is being played out in America, only a matter of time before it comes here.

My only surprise is that they 'considered changing' the inflation measure and didn't actually change it.

It would be far too overt, while now they are doing it covertly to most of the public while spewing out propaganda that it ain't their fault. Its the oil companies the super markets and the speculators which are at fault they say. When its them for printing money like no tomorrow.

Don't worry this is good for your stack if you get me drift.

Share this post


Link to post
Share on other sites

During a roundtable in June MPC members discussed whether there would be merit in excluding the volatile prices of “non-core” items, such as food and energy from the consumer prices index.

LOL!! 'Merit'? These guys are totally deluded. :blink:

They are getting desperate and the end is coming - like a train at top speed.

Share this post


Link to post
Share on other sites

This inflation fiddling game is being played out in America, only a matter of time before it comes here.

My only surprise is that they 'considered changing' the inflation measure and didn't actually change it.

One step at a time, Mr Flibble.

PRESS NOTICE

DMO LAUNCHES A CONSULTATION ON CPI-LINKED GILTS

The United Kingdom Debt Management Office (DMO) announces the launch today of a consultation

to help build an evidence base to inform the Government’s consideration of whether to issue

gilts whose coupon and principal payments would be linked to the Consumer Prices Index (CPI).

The formal period of consultation will close on 22 September 2011.

http://www.dmo.gov.uk/documentview.aspx?docName=/gilts/press/pr290611.pdf

Share this post


Link to post
Share on other sites

Volatility implies something fluctuates up and down. Funny how food and energy are only volatile in one direction.

Share this post


Link to post
Share on other sites

Don't they know that "deflation cometh"?

Mendacious *******.

Volatility implies something fluctuates up and down. Funny how food and energy are only volatile in one direction.

That depends on how you define funny. I'm not laughing. :lol:

Share this post


Link to post
Share on other sites

This is just softening us up for an actual change in the future.

I suggest they only put things that are actually deflating in the basket of goods to bring it back to target. Here's a small list:

Last year's must have Christmas toy which is no longer very desirable

Envelopes [used]

Houses

Share this post


Link to post
Share on other sites

Non-core? How the ****** can you say that the cost of food and energy is not a core item of conumption. Who the ****** o do they they are comming and what the ****** do they think it will do to iprove the situation. Why bother fiddling the stats even further than they are already, they are already ignoring their mandate and the inflation they are creating.

Jumped up little tossers.

http://www.mortgageintroducer.com/mortgages/240823/4/Daily_news/MPC_considered_changing_inflation_measure.htm

As I mentioned here a few times, BoE should really be using CPI-2 which excludes any item where price increases by more than 2%...

Share this post


Link to post
Share on other sites

Non-core? How the ****** can you say that the cost of food and energy is not a core item of conumption. Who the ****** o do they they are comming and what the ****** do they think it will do to iprove the situation. Why bother fiddling the stats even further than they are already, they are already ignoring their mandate and the inflation they are creating.

The problem is not with the concept of 'core inflation', rather with the name.

'Core' inflation is somewhat of a misnomer. It is not meant to reflect inflation of 'core' purchases, it is mean to reflect inflation in items where interest rates exert the bulk of their control. There are many factors contributing to inflation - some are directly related to monetary policy, others are indirectly related and some are unrelated.

The 'core' in 'core inflation' refers to those factors that are directly related to interest rate policy.

There is a big difference between the inflation rate measure that best advises interest rate policy and the inflation rate measure that best measures cost of living. Historically, interest rate targets were based on best estimates of cost-of-living. This has lead to problems in the past.

The most simple example is to look at why the RPI is unsuitable for use for interest rate setting. As housing costs are a major contributor to household expenditure, and a substantial proprtion of costs are mortgage interest - the RPI is drastically affected by changes in interest rate policy. Worse, a drop in interest rates, causes RPI to drop sharply (due to reduced interest payments), and vice versa. In other words, fighting inflation with increased IRs actually makes the inflation measure higher. For this reason RPI is not used for IR policy - historically, it has been RPIX (which excludes mortgage interest). More recently it was changed for CPI, which was intended to further reduce weighting in purchases that are highly sensitive to 'external factors'.

The problem with using CPI or RPIX is that certain purchases have prices set externally, beyond the reach of the central bank. A good example of that is energy - energy is traded on an international market, especially coal and oil, but increasingly gas as well. In the 70s, a sudden oil price spike resulting from the ME oil crisis, sent inflation spiralling around the world. The response of central banks was to ramp up interest rates.

In reality, that was completely the wrong thing to do. Changing interest rates would do little for the price of oil - it was a supply problem, not a currency problem or a problem of excessive money in circulation. In fact, the high oil price had the effect of removing money from the productive economies aruond the world. With high IRs added on top of that, it was catastrophic and decimated many economies all around the world. In retrospect, it would have been better to do nothing, or even to lower IRs to counteract the sudden removal of money - you would accept you would have inflation, but it would be largely unavoidable.

By using 'core' inflation, central banks are able to filter out much of these 'external factors'. As a result, an oil spike would not be reflected in 'core inflation', and not prompt interest rate rises. Instead, as money was removed from the productive local economy, 'core inflation' would fall, and bankers could act to increase the money supply.

Share this post


Link to post
Share on other sites

To exclude 'non core' inflation items of food and energy, they're really trying to get to a currency adjusted measure of inflation.

Why don't they just go the whole hog...then they'll be able to prove that we've had deflation.....of living standards.

Of course we now have deflation of living standards...we did have inflation of living standards and they could see it was unsustainable. ;)

Share this post


Link to post
Share on other sites

be interesting to see how they position the BoE p[ension fund if this comes to pass.

I doubt that the Bank of England will still exist in a couple of decades' time.

Just like private equity directors are extracting all value from long established businesses while running them into the ground, the current management of the BoE are converting its credibility into salaries and pensions for themselves.

It's slightly comical that the almost 90% of the BoE pension fund is held in the form of inflation-linked government bonds. They are lending their personal fortunes to the very government they are helping to bankrupt. Seems to me there is a good chance they will lose the lot.

What would really interest me is if the BoE pension fund was being put into the yellow stuff.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.